USD/JPY analysis: bears ready to push it lower
|USD/JPY Current price: 107.90
- Wall Street closed at record highs, Treasury yields finished the week with gains.
- Trade tensions and a global economic slowdown boosted demand for safe-havens.
- USD/JPY bearish case reaffirmed with Friday’s slump.
The USD/JPY pair has closed Friday at weekly lows around 107.90, as speculative interest got read of its dollar’s despite some signs that should have sent the Yen lower. Wall Street resumed its advance, with the three major indexes reaching fresh all-time highs on the back of speculation the Fed will provide the markets with monetary stimulus. Demand for government debt eased, with US Treasury yields ending the week with substantial gains. However, trade tensions between the US and China remain, while US Treasury Secretary Steven Mnuchin issued a warning Friday that the US government is at risk of running out of cash as soon as early September, fueling demand for safe-haven assets. Persistent dollar’s weakness also added to the pair’s bearish case. There won’t be economic releases in Japan at the beginning of the week as the country celebrates a holiday, which will keep financial institutions closed.
USD/JPY short-term technical outlook
The USD/JPY pair closed the week at a critical inflection point just below the 108.00 figure, with scope to extend its slide during the upcoming sessions, as, in the daily chart, it also finished below the 20 DMA, while technical indicators turned sharply lower, the RSI currently at around 43. The 100 and 200 DMA remain far above the current level, indicating that, in the long-term, bears retain control. The 4 hours chart shows that the pair settled below all of its moving averages, with the 20 SMA accelerating south above the larger ones, and the 100 SMA at around 108.00, reinforcing the strength of the level as resistance. Technical indicators in this last time-frame remain within negative levels, the RSI barely losing its bearish strength at around 36, in line with further slides ahead.
Support levels: 107.50 107.10 106.75
Resistance levels: 108.00 108.35 108.70
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